Indian Prime Minister Narendra Modi came to office promising big reforms. His latest effort has been garnering some headlines. In Reuters, for example:
India approved a plan on Wednesday to allow foreign investors to settle, emulating a policy in countries such as the United States and Singapore to woo investment from abroad.The proposal, aimed at giving a fillip to Prime Minister Narendra Modi’s “Make in India” program, was first announced in February’s federal budget.Foreigners need to invest 100 million rupees (1.13 million pounds) over 18 months, or 250 million rupees over three years, resulting in jobs for at least 20 resident Indians every fiscal year to be allowed to settle, the government said in a statement.
Modi has been declaring success, not just about this latest development but about his overall reform agenda. As evidence, he points to a 23 percent increase in FDI in the fiscal year ending in March. But that increase is almost certainly the result of China’s slowdown and the subsequent competitive edge India gained against struggling China-dependent emerging markets. India did open up to more FDI a few months ago, but that was after the 23 percent increase took place.The bottom line is that very few of Modi’s reforms have made it through congress, and those that have are pretty weak—is residency in protectionist and chaotic India really attractive to millionaires and billionaires? It’s good that Modi’s still championing reform and that India is getting more attention from investors, but that shouldn’t distract from the struggles that have often characterized Modi’s economic agenda thus far.